UPDATE 1-Canada factory and raw material prices fall in May

Fri Jun 27, 2014 8:35am EDT
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(Adds sectoral breakdown, effect of stronger Canadian dollar)

* Industrial product prices -0.5 pct on month, +3.4 pct on year

* Raw materials prices -0.4 pct on month, +7.6 pct on year

* Forecast: industrials no change on month; raw materials -0.1 pct

* Cheaper energy, stronger C$ major causes for factory price fall

OTTAWA, June 27 (Reuters) - Canadian industrial product prices unexpectedly fell in May, due largely to cheaper energy and a stronger currency, while prices for raw materials fell by more than predicted in May, principally because of cheaper animals.

Statistics Canada reported on Friday that factory prices were 0.5 percent lower in May than in April, after a 0.2 percent drop in April. They were 3.4 percent higher from May 2013. The raw materials price index fell 0.4 percent on the month, the first decline since November, but rose 7.6 percent on the year.

The median forecasts in a Reuters survey of economists was for no change in product prices from the month before, and a 3.8 percent increase on the year; and a 0.1 percent monthly fall in raw materials prices and a 7.5 percent rise on the year.